The Changing Economics of the Information Age

Goods and services worldwide are becoming ever more information-based.
Information processing has a new cost structure for which traditional
capitalism is ill-suited. By rewarding
competition rather than
cooperation,
capitalism wastes an increasing amount of time, effort and resources.

Economic thought and institutions stem from an era of locally distributed goods
that were laboriously handmade, usually with minimal set-up costs and large costs per unit.
Over time, services became more important, production was mechanised, and set-up costs increased.
Mass production entailed higher fixed costs
(machinery, premises, overheads) but lower unit costs due to streamlined throughput.
The information age takes this progression one step further, with huge
fixed costs (e.g. writing a piece of software or recording a film), but near zero unit costs
(running a webserver is enough to copy and distribute information worldwide).

As the economy becomes increasingly virtual, capitalism is showing itself
increasingly unsatisfactory. The traditional
pricing system is still based on unit costs, which are a
very poor reflection of the cost structure of information goods.
In such circumstances, tremendous inefficiency is inevitable.

Rent-seekers, meanwhile, have legally enshrined conflict in the status quo.
Intellectual property laws, for example, prohibit copying. This costing structure
places the interests of business owners (who do not want private copying to happen) in direct
opposition to those of the users (who do), and often in conflict with actual producers
(who may want their work to benefit as many people as possible, whether or
not they have a financial interest).
By contrast, public domain software may be freely copied. Shareware has a pricing structure that
directly aligns the interests of everyone: owners, producers and consumers. Authors want their
software to be copied, users want to do the copying for them.

Capitalism's focus on profit maximisation pits people against one another.
Although tackling identical problems, commercial secrecy laws are rigidly enforced to prevent
programmers from different companies from cooperating with one another.
The result is expensive, unreliable software, designed with lock-in and other
aspects that increase profits but which are obviously not in the public interest.

Why do people tolerate this? Increasingly, they do not!
Free software (such as GNU/Linux)
is rapidly increasing in quality and already has a reputation for reliability.
It is the pattern for a new, collaborative rather than competitive
model of human activity that will embrace more and more areas of life.